The Dubai Financial Services Authority (DFSA), the independent regulator of the Dubai International Financial Centre (DIFC), has issued a significant warning regarding the escalating frequency and sophistication of cyberattacks. This increasing threat is largely driven by the advanced capabilities of AI and automation tools, as detailed in their new report, ‘Cyber and Artificial Intelligence Risk in Financial Services: Strengthening Oversight Through International Dialogue’.

The report thoroughly examines the evolving digital risk landscape, highlighting how emerging technologies such as artificial intelligence and quantum computing are profoundly reshaping regulatory priorities within the financial sector. It specifically details how malicious actors are increasingly leveraging AI and automation to enhance their reconnaissance and execution capabilities. Key threats identified include the rise of double extortion ransomware and the growing prevalence of supply chain attacks, both of which pose substantial challenges to the security and integrity of financial systems.

In response to these pervasive and sophisticated threats, the DFSA strongly emphasizes the critical need for regulators and financial institutions to prioritize and significantly bolster their cyber resilience strategies. The report also notes that while regulators are generally well-versed in traditional operational risks, the concept of operational resilience, particularly in the context of systemic cyber risks, remains a less developed aspect within current supervisory approaches.

Beyond the immediate cybersecurity threat landscape, the DFSA's report also extends its focus to two other deeply interconnected areas: the emerging risks associated with artificial intelligence and the transformative potential of quantum computing. A key concern highlighted is the potential for quantum computing to render current encryption methods in vital communication systems entirely obsolete. To mitigate this future threat, the report underscores the critical importance of early and coordinated planning around post-quantum cryptography, which involves developing new cryptographic algorithms specifically designed to withstand the processing power of quantum computers.

The publication of this comprehensive report follows a pivotal event hosted by the DFSA in May 2025: its inaugural Cyber and AI Risk Regulatory College. This significant gathering convened approximately 70 senior representatives from 18 financial authorities across diverse global regions, including the Middle East, North America, Europe, Africa, and Asia. The College served as an essential international forum, facilitating open dialogue on the increasing complexity and interdependence of cyber risks, the accelerated adoption of AI in finance, and the profound long-term implications that quantum computing holds for the financial sector.

Herman Schueller, Director of Innovation and Technology Risk Supervision at the DFSA, underscored the importance of such collaborative efforts, stating that as innovation accelerates, financial regulators globally are actively examining how best to adapt oversight practices. He further commented that the report reflects the value of open, cross-border dialogue in building a mutual understanding of the regulatory, technical, and operational dimensions of digital risks. Echoing this sentiment, Justin Baldacchino, Managing Director of Supervision at the DFSA, added that “Digital risks are no longer peripheral – they are fast becoming systemic.” He emphasized that this report reflects a growing supervisory consensus on where these risks are converging and how regulatory approaches are consequently evolving. Baldacchino expressed pride in hosting the first Cyber and AI Risk Regulatory College and looked forward to continuing meaningful dialogue with regional and international peers in support of a secure, resilient, and trusted global financial system. This report is part of the DFSA’s broader commitment to proactive, forward-looking supervision and its crucial role in fostering collaborative, principle-based approaches to regulating emerging technologies within the financial sector.